However, one name crops up with increasing frequency whenever the future of the British film industry is discussed: Nik Powell, who, with his partner Steve Woolley, has spent nine years building the Palace Group. Powell is now emerging as an entrepreneurial role model to rival the venerated Jake Eberts.

A Virgin record

Powell, 41, began his working life in the record business. Alongside former partner Richard Branson, he was for 15 years one of the architects of the Virgin Group. Parting of the ways with Branson was not entirely happy and Powell has been locked in vigorous rivalry with his former partner ever since he founded Palace in 1981.

Palace began as a vid store and a vid label. Finding that no one would sell them vid rights without theatrical, Powell and Woolley, a former cinema programmer, moved almost at once into theatrical distribution.

He was skeptical

“I was very skeptical about theatrical but Steve said we must do it,” Powell recalls. “He was right. My skepticism forced us to do it carefully.”

This early episode illustrates two key points about Palace. First, Powell, the business brains, relies heavily on Woolley’s knowledge of films and instincts about the film business.

Second, while the company has a deserved reputation for being bold, energetic, streetwise and sassy, it has nevertheless grown cautiously and kept a tight lid on costs. (It still operates out of a warren of low-rent rooms in a Soho back street.)

In fact, appearances not withstanding, Powell and Woolley are a conservative duo who like to work with people they know (notably helmer Neil Jordan, who has made four films with the company) on projects they feel comfortable with. (The Palace production slate has been described as a re-run of the type of films that most impressed Woolley in his youth.)

First two theatrical releases, “Diva” and “The Evil Dead,” set the tone for everything that has followed. Former pic was French-language but fashionable and Powell and Woolley demonstrated promotional skills by gaining acres of free editorial space to assist its launch. “The Evil Dead,” by contrast, was an exploitation movie, albeit one with style and humor. Again, Palace turned it into a media event. Both films were boxoffice hits and the company has thrived by mixing arthouse and exploitation ever since.

Guided by Woolley, Powell took the company into film production in 1983 with “Company Of Wolves.” Subsequent track record has been creditable, if, from a commercial angle, unspectacular: “Mona Lisa,” “Absolute Beginners,” “Dream Demon,” “High Spirits,” “Shag,” “Scandal,” “Hardware,” “The Big Man” and “Miracle.” Still to come are “A Rage In Harlem” and “The Pope Must Die.”

Noteworthy mix

Again, the mix of art-house and genre pictures is noteworthy. So is the parsimony with which Powell has managed to eke out Palace’s slender resources to pay for them. Woolley is equally frugal, developing only one project, “Cowboys,” that has failed to come to fruition.

“We are still not interested in volume production as an end in itself,” Powell says. “It is much better to produce one or two successful pictures than five or six that don’t perform.”

Nor is Palace likely to make a habit of fishing in the American talent pool, as it has done recently for “A Rage In Harlem,” directed by Bill Duke and starring Greg Hines, Danny Glover and Forrest Whittaker.

“It takes time to learn the skills needed to craft big-budget movies as well as to package the deals,” Powell explains. “If you rush in you will get your fingers burned, as has been done famously so many times already. Those who have avoided failure, like Jeremy Thomas and David Puttnam, have spent a decade or more learning their craft on smaller pictures.”

Palace has flirted with failure. “High Spirits” and “Absolute Beginners,” the two bigger-budget pix the company has produced to date, were notable flops. Per Powell, the company will one day return to the big-budget arena but is meanwhile firmly committed to making British films in the $5-6 million range.

Palace is now active in film and vid distribution, post production facilities, video retail, television production, feature film production, foreign sales and, as part of a consortium bidding for a Channel 3 franchise, television broadcasting.

A miniature studio

No other company in the U.K. can boast such a broad range of activities and, other than broadcasters, few can claim to be more expert than Palace in any of them. It is an integrated company: a studio in miniature.

Its core activities remain production and distribution, with neither taking precedence over the other.

“The two go hand in hand,” Powell explains. “Distribution is the generator of cash and profits while production supplies the distribution machine and at the same time builds an asset base with long-term value.”

But, as Powell is aware, Palace will soon reach a plateau. To scale greater heights it will need considerably more capital to play with than hitherto. This is not a prospect that fills the exec with excitement.

“Our ambitions are qualitative rather than quantitative,” he says. “We don’t want to become a big corporation. We want to be solid, established and still innovative. We want to be financially and artistically successful and we would like to be highly regarded, in the financial marketplace as well as in the film industry.”

According to Powell it will take “another eight or nine years” before the company achieves these goals. Beyond that is anybody’s guess.

“What we need is a major hit that will generate cash flow and eliminate our debt,” Powell says. “We won’t make decisions about the future of the company until that happens. My gut feeling is that we will have a major worldwide hit at some point, but I have to run the business on the basis that we won’t.”